Which of the flowing statements about adverse selection and underwriting provisions is incorrect?
a. Adverse selection means that those individuals with greater risk are more likely to purchase insurance.
b. Adverse selection occurs because of asymmetric information.
c. Insurers minimize adverse selection by using underwriting provisions.
d. Health insurers typically include pre-existing condition clauses.
e. Health insurers have unlimited power to set underwriting provisions.
Ans: e. Health insurers have unlimited power to set underwriting provisions.
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